January 10, 2010

Don’t Reduce Price, Increase VALUE

So, here’s the situation: your price is $26.25 and our competitor’s price for the same product is $23.00. What options do you have to compete?

Your first choice is to reduce your price; this is the most common reaction. The problem is that unless you can reduce your costs of supplying the product all you do is reduce your margins. And, you have to prepare for another potential round of price reductions if your competitor decides to further reduce their prices.

I am not a fan of competing on price. It can be easily copied by your competition and it generally eats into your profits. It is NOT a BE DiFFERENT approach.

Your second choice is to add value to more than fill the $3.25 price gap. This is the BE DiFFERENT Practice that will not only set you apart from your competitors but will also give you the opportunity to enhance your margins. In addition, it makes it more difficult for your competition to copy your move. VALUE differences are tough to copy; price is easy.

Here’s a personal example of how this works. Lets say you are an author and your on-line book price is $3.25 higher than your competition. Matching the competition is really not an option as your cost structure is too high. You don’t have scale and scope advantages like the big on-line book sellers. To compete, the only choice you have is to add value to your on-line offering that they can’t match.

So you might decide to add two value components to differentiate your Offer:
- sign every copy of the book sold
- offer a 30 minute conversation with anyone who buys your book on any topic that interests the purchaser

Hard to copy. Adding real value. DiFFERENT.

Force yourself to look at adding value whenever you are confronted with a price difference. Resist the temptation to take the easy way out and drop your drawers on price. It generally doesn’t work and gives the illusion of an effective response.

Ask ‘What real value can I add to fill the price gap?’

Cheers, Roy Osing
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Posted 1.10.10 at 07:02 am by Roy Osing | Permalink | Comments (0)

January 7, 2010

Geox: a Triple Play

Personal story…

My wife and I were in Paris this year and we decided to buy Geox shoes for each of our five grandchildren. Were were captivated by the style of the kids shoes and the price point was right so we made the purchase.

We hit 3-for-4. They hit the mark with everyone but our youngest granddaughter. Unfortunately we brough home 2 left foot shoes! Dumb thing to do, but we missed it.

I sent an e-mail to the store in Paris but got no response. I admit that I was thinking that we would get no resolution of our problem.

Then I e-mailed the Geox main HQ in Canada. In one day I received an apology back and a question as to which store in the Vancouver area would be convenient for me to go in to and exchange the 2 left-footers for the real thing. I responded and within a few days I had a replacement pair of shoes (even a more fasionable syle that the original ones we picked out). Done. No pain.

Conclusion: it is so nice to run into an organization that provides the appropriate balance of:
- a fashionable product line
- competitive prices that reflect the VALUE of what you are getting
- dazzling customer service particulary when there has been a blunder.

Nicely done Dick Debbie and Geox Canada

Cheers,
Roy Osing
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Posted 1.7.10 at 03:46 pm by Roy Osing | Permalink | Comments (0)

January 4, 2010

Serving Customers Dumb Rule in Retail

There are still retailers out there that refuse to offer a refund when you return an article to them; rather they insist you get an in-store credit that can be used at a future date.

Why do retailers do it?
- To deter people from returning product. Which actually translates into ‘We really don’t care whether the garment meets your needs. You bought it. You keep it.’
- To prevent a short term cash flow problem. They don’t give the customer their money back. They take on a future liability when (and if) an article is eventually purchased.

This is a classic Dumb Rule as its impact on the business actually destroys customer value in the long run:
- The customer is annoyed because they have the hassle of returning the product.
- They are further annoyed because they can’t get a refund.
- They are further annoyed because in all probability they are unable to find a suitable replacement for their original purchase in the store at the same time the return is made.
- They reluctantly take the in-store credit and promptly tell others how upset they are and how rotten the service is at this retail outlet.
- They are really upset over the fact they have to go elsewhere and purchase another product.
- They will have to essentially pay twice for what they want at least until they use the credit at some time in the future.
- They leave; come back to use the credit and never return.

The retailer removes any possibility of repeat business and with it the longer term revenue annuity stream.

As well their serving customers reputation goes in the tank.

How can this be good for them? It can’t.

Fortunately this type of Rule is used less and less as businesses wake up to the fact that the customer drives the business and if they don’t treat people they way they want to be treated the organization will pay the ultimate price.

Cheers,
Roy Osing

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Related Blogs
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Posted 1.4.10 at 07:57 am by Roy Osing | Permalink | Comments (0)

January 1, 2010

An Educator Passes Judgement on BE DiFFERENT

“Distinguishing your company in a saturated marketplace is a persisting test that many business leaders never past. In order to survive unruly external conditions, organizations need to adopt internal practices that allow them to be seen as unique by their customers. Osing refers to these practices as his BE DiFFERENT strategies.

It is important to recognize that creating a formula for being different is difficult and sounds almost counter-intuitive. Osing, however, cuts through the inspirational jargon with which many business texts distract their readers and provides a practical and concrete framework that can be customized to suit both large and small enterprises. His recommendations to improve your strategic planning, marketing,sales and customer service approaches also compel you to rethink your staff structure and your investment in information technology.

BE DiFFERENT does exactly what it recommends its readers to do: cuts the crap and focuses on execution.

Osing is the current president and CEO of Brilliance for Business. More information about this book and the seminars Osing offers can be found at www.bedifferentorbedead.com”

Thanks for that Trek magazine and UBC. It is particularly gratifying to get an ‘A’ from the academic community.

Cheers
Roy

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Posted 1.1.10 at 03:33 pm by Roy Osing | Permalink | Comments (0)